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Competitive Edge Blog

  • alison28006

Medical Expenses and your Business

Can you claim medical expenses in your business? If so, how?

Any small business can enroll in a Private Health Services Plan (PHSP) to provide themselves and their employees tax-free health benefits to cover out-of-pocket medical expenses.

Health benefits provided by a PHSP are 100% deductible by the small business and 100% tax-free for employees.

For example, if you submit a $1500 claim to your PHSP and pay the adjudication fee, you can claim the medical expenses as an expense in your business like your phone, association fees, saving anywhere from $500-700 in taxes depending on your personal situation.

If you don’t take advantage of a PHSP, your net medical expenses can only be claimed further down in your tax return/calculation. When the same $1500 medical claim is calculated here, your tax savings are likely to be less than $200.

The other thing that I like to make people aware of is that depending on your overall situation, you may not even be able to claim the medical expenses here since it is the 2nd last item that gets factored into your tax calculation.

Entrepreneurs and self-employed professionals use this tool among many others, to reduce taxes and keep more of their money in their pocket. The main advantage of a PHSP is the ability for small businesses to attract and retain talented employees while controlling their costs.

If you operate a small business, you should consider participating in a PHSP Plan for yourself, your family and your employees allowing even more tax savings.

Until Next time,

Christine Walters

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